Mr. CLAGUE. We believe that when we have done our revision of the Consumer Price Index, we should request funds to really modernize this budget according to the pattern of the 1960's. What we have done now is to take the old budget we had in 1949 and bring it up to date with some modifications of food expenditures based on the survey the Department of Agriculture did in 1955. But the budget has not been modernized completely. So we may be asking you about 2 years from now as to whether we could not undertake a major modernization of that for the future. Mr. FOGARTY. Do you have a statement on the Consumer Price Index revision? Mr. CLAGUE. Yes. Mr. FOGARTY. We shall include that in the record at this point. (The statement follows:) STATEMENT OF EWAN CLAGUE, COMMISSIONER OF LABOR STATISTICS, ON THE REVISION OF THE CONSUMER PRICE INDEX For this year the Congress provided us with $230,000 to cover the first year of a 5-year plan for revision of the Consumer Price Index. For fiscal 1961 we are requesting a total appropriation of $1,250,000. I want to set forth our justification for next year's appropriation and also to sketch in broad outline the whole 5-year project. With the funds provided this year we will be able to do the preliminary planning and testing which is necessary for the successful conduct of the family expenditure surveys which will be done during the coming 2 years. We have designed a new and improved survey schedule which is now ready for use in our field test, which will take place shortly. We have selected the city of Cincinnati for this test. By using census maps we have selected the city blocks from which our sample of families will be drawn, have completed the instruction manuals which will be used in the training of our field agents, and begun the training itself. Because of the field work being done by the Bureau of the Census next spring for the census of population, we will begin our own fieldwork in the month of May. At that time we shall visit 300 families for a full study of their family living expenditures during the year 1959 and an additional 300 families for partial information, using somewhat different collection methods. On the basis of our experience in Cincinnati, we shall plan the major surveys scheduled for the next 2 fiscal years. In fiscal 1961 we plan to survey families in about half the 70 cities, with the remainder being completed in fiscal 1962. During these 2 years we shall also be looking very critically at our samples of outlets and items which are the basis for our measurement of price changes. For this purpose we will initiate a program of price data collection to provide the statistical basis for selection of a new item sample for the revised Consumer Price Index. In fiscal 1963 we shall be tabulating the results of the expenditure surveys and continuing with testing the price behavior of hundreds of commodities and services in order to decide on the items which will be selected for the market basket of the revised index. The present index prices about 300 different goods and services out of several thousand items that the average family buys. A check is needed to determine whether we have enough items in the market basket and also whether these are the best ones to reflect the prices families pay. Any item in the index is chosen because it is highly representative of the price behavior of the group for which it stands. But these price patterns may change over a period of time, so that new tests are needed to determine whether changes should be made in the items or in the grades and qualities selected for pricing. In fiscal 1964 the final computation of the revised index will be completed and the publication will be started in January 1964. We are planning to have an overlap in that we shall publish the old index for 6 months after the revised one is introduced. We hope that this will assist the users of the index to adjust to the revision. There is one major policy question which I wish to bring to the attention of the committee. In our previous family surveys we have drawn our sample of families from city dwellers only. However, since World War II the tremendous expansion in automobile transportation and the growth of home ownership through suburban and rural housing has greatly altered the patterns of family living. A great many workers now live in rural areas, even though they are mostly, if not entirely, wage or salary earners holding jobs in the cities. Furthermore, even a good many farmers and farm workers are supplementing their farm incomes by taking jobs in the cities during a substantial part of each year. For this reason, a proposal has been developed for a supplementary family expenditure project which would include both farm and rural nonfarm families in other words, a representative sample of the entire U.S. population. We are not proposing this project for fiscal year 1961. It is being considered for presentation for fiscal 1962 when these rural surveys would be conducted. The survey results would be tabulated and published in fiscal year 1963. If this project is approved, the Bureau of Labor Statistics will arrange with the Agricultural Marketing Service of the Department of Agriculture to conduct the farm surveys for us, and also a portion of the rural nonfarm surveys. They have an organization of experienced agents who could readily be trained to do this work. The expanded work would involve some additional costs spread over a period of 2 fiscal years, 1962 and 1963. However, we do not yet have a firm estimate of what the cost would be. SUMMARY OF BUDGET REQUEST Mr. FOGARTY. Your request for 1961 is $1,260,000. Last year the total cost of this project was estimated at $4,600,000. What is the current estimate? Mr. CLAGUE. The estimate of $4,600,000 is what we are submitting this year. Mr. FOGARTY. It is still firm? Mr. CLAGUE. Yes. Mr. FOGARTY. The last revision took about 31⁄2 years. Do you think this one will take 5 years? Mr. CLAGUE. Yes. Mr. FOGARTY. You thought the last revision would take at least 4 years. You gained ground somewhere along the line. Mr CLAGUE. Yes; we gained ground but we think at some cost. I think we did a very good job and we have no apologies, but the fact that we have spread our family expenditure surveys over 2 years this time will make a big difference. It is much better. We have to hire fewer people, and we employ them for 2 years. This means that we will have a more orderly program. Also, when we made the revision last time we did not provide for a 6-month overlap of the new and old indexes. So, as an emergency we had to revise the old index and carry it forward. for 6 months on a special appropriation. This time we have definitely provided for that, and we are hoping to make it a smoother transition, so that there will be no trouble. Mr. FOGARTY. You think 5 years is the minimum to do a good job in an efficient manner? Mr. CLAGUE. Yes, we strongly feel that. I have another point in my statement, but I would like to remind all the committee members of it—namely, that a question has arisen as to whether or not we should make these surveys broader in the second year. We have been talking with the Bureau of the Budget, but they have not accepted the proposal yet. The question is whether, in our second year of expenditure, we should reach out and take rural families and rural nonfarm families so as to cover the entire population. Our present plan covers the city population only. I don't need to go into a long discussion about that possible extension. There are many strong grounds for making this a truly comprehensive survey of the entire population, including both the farm and the rural nonfarm population. Many of our city workers now live out in farm areas. Some of them even live on small farms and drive into the city to their regular jobs. They are industrial and white collar workers. This is a form of living that may be expanding. Mr. LAIRD. May be expanding? It is going up by leaps and bounds. Mr. CLAGUE. I meant going into the future also. At any rate, we may be before you with another idea, if the Bureau of the Budget lets it through. This would require the cooperation of the Department of Agriculture and several other Departments, too. I might be in next year asking for that. EFFECT OF POSTPONING REVISION Mr. FOGARTY. What would be the effect if someone wanted to offer an amendment on the floor, for economy reasons, to cut out the increase to revise the Consumer Price Index? Mr. CLAGUE. Well, Mr. Chairman, I think that would be a disaster. I really think it would interrupt our whole program of improving the index. The plans are underway. We have made our planning work this year. We are going to run a sample of families in Cincinnati in May to test out our program. That would put an end to the revision program. Mr. FOGARTY. What would the result be? Mr. CLAGUE. Well, we would continue to make the index the way we are making it. Mr. FOGARTY. Not up to date? Mr. CLAGUE. Well, it would run along and deteriorate, as we feel it will deteriorate, if we don't take action. It would really mean stopping the revision of the index because we could not possibly go on, and we would have lost the money we have invested in it. Mr. FOGARTY. Mr. Marshall? WAGE DIFFERENTIAL STUDY Mr. MARSHALL. Mr. Clague, you mentioned that you were carrying on this wage differential study in 80 new localities? Mr. CLAGUE. Yes. Mr. MARSHALL. Do you do that on the basis of a competitive industry or on an area coverage basis? Mr. CLAGUE. We do that phase on a metropolitan area basis, but the city is chosen in part because of its importance in its section of the country. We also make industry studies, which are different— that is, a detailed study of a particular industry-for example, the apparel trades or the steel industry. Mr. MARSHALL. If I were to ask you for information concerning the wage scale of people engaged in the furniture industry in the Appalachian area as compared to the upper lake area, could you furnish information of that kind? Mr. CLAGUE. We made a study of the furniture wages and my answer is that I believe we could. I don't know if I could meet your specifications on the areas. I would have to find out how our regions are drawn up. Mr. MARSHALL. Could you supply for the record a comparison of wages paid the furniture industry in the Appalachian area versus the upper Lake States area? Mr. CLAGUE. Yes. I may have to consult you. Suppose I do that. I will show you the geographical breakdowns we have already got and see how well we fit your request. We do survey furniture, and I will find out what we have. (The information referred to follows:) The following information is supplied in response to the request by Congressman Marshall. The border States and the Southeast region appear to correspond most closely with the Appalachian region, while the Great Lakes region appears to correspond roughly with the upper Lake States. Further information regarding earnings in the wood household furniture industry, including a description of the study, appears in the Monthly Labor Review for December 1959 (pp. 1357-1362). Average straight-time hourly earnings of Workers in selected occupations in wood household furniture, except upholstered, manufacturing establishments, United States and selected regions,' April-May 1959 ! Excludes premium pay for overtime and for work on weekends, holidays, and late 2 The regions used in the study include: New England-Connecticut, Maine, Massa- Mississippi, North Carolina, South Carolina, and Tennessee; Southwest-Arkansas, NOTE.-Dashes indicate no data reported or data that do not meet publication criteria. |